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Saudi Aramco, Sinopec Set Pact on Refinery

By

Summer Said

March 16, 2011 2:58 p.m. ET

RIYADH—State giant Saudi Arabian Oil Co., or Aramco, said Wednesday it signed a memorandum of understanding with China Petrochemical Corp., or Sinopec Group, to develop the 400,000-barrel-a-day Yanbu refinery on the Red Sea coast.

Sinopec Group will initially hold a 37.5% stake, and Saudi Aramco will have a 62.5% stake in the project should they proceed to formally participate in a joint venture, which will start operation in 2014, Aramco said in a statement posted on its website.

Sinopec Group is Asia's biggest oil refiner by capacity and the parent of Hong Kong-listed China Petroleum & Chemical Corp., also known as Sinopec.

U.S. oil major ConocoPhillips last year pulled out of the Yanbu project as it decided to cut back on refining and marketing activities.